Ethereum Whales Accumulate Billions, But Growth Remains Stagnant

Active trading whales have accumulated more in 2018 than any period in the Ethereum's history despite the ongoing bear market. November closed with whales sitting on a whopping 80% increase versus the start of the year. The tally now for the top ethereum actively trading addresses is a cool $2.3Bn, holding nearly a fifth of Ethereum's circulating supply. But on the balance, big players have come and gone with overall whales holding as much as they did during peak.

Assessing underlying data provided by TokenAnalyst, over 5200 actively traded addresses have held balances that propped them up within the Top 1000 since Ethereum's Genesis.

Today, whales who continue to maintain a balance are an even 500 at the end of November, holding over 20Mn ETH alone, just shy of 20% of the 'super computers' total circulating supply. At the start of the year, whale addresses amounted to 11Mn during peak season, and only 5Mn at the start of 2017.

|| ICO INVESTORS LOOKING FOR THE EXIT?

The massive growth in Ether holdings by active whales could, and most likely is, the result of traders exiting the trading of tokens, most of which have been paired with ETH, which has plummeted by all accounts versus the start of the year (Diar, 26 November).

|| EVEN STEVEN

On an Ether holdings basis, and as a total of whale holdings, the balance is exactly split at the start of December versus the start of the year at peak season indicating that new entrants are yet to come into the space. There are now fewer whale addresses than the start of the year, a drop of nearly 30%, with active traders consolidating further holdings of the circulating supply.

|| COME BACK QUARTER?

Still, despite holdings across major whales being equal since July 2017, and total holdings plummeting in value from $21Bn at the end of January, now standing at only $2.3Bn, the net balance of additions and withdrawals throughout 2018 to date stands at a positive of $1Bn.

While this may not indicate fresh money, 90% of these funds did come through in 1Q18. On quarterly basis, whale net balance growth have closed at anegative since 2017. But 4Q18 with one month left on the calendar stands at a 270% increase versus the previous quarter.

Announcement:Diar has partnered with TokenAnalyst to provide a macro-view of Ethereum Flows. For live contextual data, visit tokenanalyst.io

Whale Active Address Holdings Increase Over 4x Since 2017 (ETH)...

...Active Whale Addresses Remain Fairly Balanced in 2018 (ETH)

1Q18 Saw $2.4Bn in Net Whale Address Balance (USD)

Coinbase Nears Full Circle with ZCash Exchange Listing

Coinbase has seen its portfolio double this year with the latest listing of ZCash, a cryptocurrency built upon Bitcoin and has developed an opt-in privacy layer. The addition is inline with an announcement the exchange made earlier in July, now having added 3 out of the 5 possibilities. The remaining coins, Stellar and Cardano, might have a few thorns to iron out however. And growing parallels between Coinbase and Circle may indicate future additions.

This summer saw cryptocurrency exchange Coinbase allude to the potential listings of Basic Attention Token, 0X, ZCash, Cardano and Stellar. The latter two are now in play with the exchange following through on its exploration of the potential additions.

Coinbase backers Digital Currency Group also has ZCash in its portfolio, as well as a fund through its institutional investment arm Grayscale.

Whilst ZCash is indeed geared towards privacy transactions, it is by user-preference; the majority of transactions have not enabled the feature. The cryptocurrency has gained the approval by the stringent New York Department of Financial Services also. Regardless, Coinbase has made clear that it will only support "deposits and withdrawals from transparent Zcash addresses."

|| GROWING USDC BY EXTENSION

Coinbase has also added US Dollar pegged stablecoin USDC after partnering-up with Circle to co-found Centre, the consortium leading the development of the coin. And both of the latest coins added to Coinbase, BAT and ZEC, have only been paired up with the exchange-led stablecoin, and likely will continue to do so in the future as a means to onboard more people as a part of its larger vision of an 'Open Financial System' (Diar, 29 October).

|| GOING FULL CIRCLE

Coinbase now lists 8 of 12 listed cryptocurrencies that have been added to rival exchange/stablecoin partner Circle, who also owns Poloniex (see table). The additions are now inline with previous assertions made by Diar in June with US exchanges moving forward on a similar footing (Diar, 18 June). If history points into any direction, it's that cryptocurrencies Qtum and EOS could have a shot.

|| YOU GET WHAT YOU GIVE, BUT YOU'LL NEED TO GIVE MORE

Stellar, an offshoot from XRP, has found some momentum having bagged the support of IBM and Visa. It even secured a $3Mn loan from payment processor Stripe in exchange for 2Bn Stellar Lumens. The foundation recently airdropped $125Mn worth of tokens to Blockchain.com wallet holders.

Still, the distribution of Stellar Lumens has been very slow with only 8% being distributed in the last 4 years while the company's mandate is to release 95%. While market dilution may put downward pressure on prices, the foundation seems intent on a slow rollout.

Coinbase's own listing process states that a team must only hold a minority share as part of a cryptocurrency's sale structure; which Stellar was not. But the Stellar Foundation does currently hold custody for 82% of the tokens, of which 80% are to be distributed.

The added benefit, so it seems, is that Stellar is already listed on Circle and Poloniex, and paired up with Coinbase's favorite Dollar.

|| SOUR NOTE FOR CARDANO

A recent research report on Cardano published by Circle Research has put a little damper on the prospects, given the similar personalities of the two exchanges. "...The platform is still centralized, the smart contract layer has yet to be implemented, and key innovations around scalability and interoperability are still in research and development phase." the report said.

US-Based Exchange Cryptocurrencies & USDC Pairs

wdt_ID

Coin

Coinbase

Circle

USDC Pairs on Poloniex

1

Bitcoin

+

+

+

2

Bitcoin Cash*

+

+

+

3

Ethereum

+

+

+

4

Eth. Classic

+

+

+ (No USDC Pair)

5

Litecoin

+

+

+

6

Zcash

+

+

+

7

0x

+

+

+ (No USDC Pair)

8

BAT

+

+

+ (No USDC Pair)

9

Stellar

?

+

+

10

Cardano

?

Notes: *Poloniex supports both Bitcoin Cash Forks, Bitcoin ABC and Bitcoin SV and they are also paired in USDC.

Coinbase Digital Asset Framework - Token Sale StructureOwnership stake retained by the team is a minority stake. There should be a lock-up period and reasonable vesting schedule to ensure the team is economically incentivized to improve the network into the future.

Current Landscape Including 4.3% Inflation
A Further Distribution of 6Bn Tokens Lowers SDF Holdings to 16%

But Still Has a Massive 91% of the Tokens Earmarked for Distribution

Notes: via Stellar.org - "Lumens that were not claimed by during the Bitcoin program are currently going to the Stellar Build Challenge [Now closed - distribution: 162Mn STR] and toward the operations of SDF." Stellar has conducted 7 Challenge's so far. With 19Bn STR in circulation, it seems that the foundation has distributed a further 6Bn from it's own holdings collected from the remainder of the Bitcoin Program.

Stablecoin Market Competition Ramps-Up Speed

The most popular cryptocurrency this year, the US Dollar, has resulted in exchanges consolidating how they quote pairs in an effort to address the plethora of stablecoins now available on the market. Huobi has aggregated Paxos, TrueUSD, USDCoin and Gemini Dollars under it's own HUSD. And Binance has opted to updated their platform to indicate all markets that have stablecoin pairings.

At the start of the year, only three stablecoins traded, with Tether owning 94% of outstanding stablecoin market supply. However, competition has ramped up with at least 8 new contenders dropping Tether's dominance to 74% at the end of November.

Issued Supply - Market Values May Differ Due to Depegging

Grayscale Bitcoin Holdings Continue Rise as Prices Slide

Grayscale's Bitcoin Investment Trust (GBTC) kicked off the start of the month at under $1Bn for the first time this year. Record inflows however have resulted in record Bitcoin equivalent holdings with December notching up a little versus the start of the previous month. The cryptocurrency's space largest institutional investment firm is now sitting on over 203k BTC, just over 1% of circulating supply.

Grayscale's other cryptocurrency products have yet to find solid interest. The current Assets under Management for all 8 products sits at a tiny 56.4Mn, a notch over 6% of the sponsor's total. This has in fact now decreased from 8% when Grayscale launched its Zen Fund.

Grayscale Bitcoin Investment Trust Start of Month Holdings

Exchanges See Massive Influx in ETH Deposits, Withdrawals

88 Ethereum addresses belonging to exchanges saw a massive upswing in the last two weeks of November. 470K Net have been withdrawn from the exchanges after seeing deposits reach 16Mn ETH.

Tokenized Real Estate Assets Coming of Age

Tokenized seucrities platform Harbor which raised an impressive $38Mn this year kicked off the sale of 955 token shares to accredited investors for a stake in an off campus housing facility at the University of South Carolina. The $20Mn Real Estate Investment Trust (REIT) from Convexity Properties is being offered through FINRA registered broker Growth Capital.

|| R-TOKEN: A NEW STANDARD?

Harbor has stated that a 'Big Four' firm will monitor payment flows of the tokens, and that the tracking of ownership will fall inline with Know-Your-Client(KYC) and Anti-Money Laundering (AML) requirements as designed by the company's "Regulated-Token." The R-Token is said to ensure that accreditation, total investor caps, holding periods are met before a trade is automatically approved.

|| THAT MAKES TWO

The $20Mn sale is akin to another single asset REIT launched on the Templum platform in October. It took less than two weeks for Templum to close an $18Mn digital security offering to recapitalize the St.Regis property in Aspen.

OFAC Follows ThroughThe U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has followed through on actions it said it would take against users who are using cryptocurrencies as a means to circumvent sanctions, as first proposed in March this year after US President Donald Trump signed an executive order banning the interaction with the Venezulean Petro digital currency (Diar, 26 March). OFAC has put two Bitcoin addresses said to belong to two Persians who were party to the SamSam Ransomeware cyber attack , now empty of coins, on their tracking list, indicating that the department is eyeing crypto, but this ultimately is more of a symbolic alert. [Link]

Editor's Opinion:
Bitcoin Goes Green?A report published last week by Coinshares, the company behind XBT Bitcoin & Ether Exchange Traded Products on the Stockholm Nasdaq, claims that 77% of Bitcoin mining comes from renewable sources. Whether or not true, the report is remiss of the fact that China, where most mining takes place, does not actually have any spare power generation capacity. As such, the usage from Miners only means it's being replaced by coal, predominately, to keep the lights on in the provinces. Bitcoin energy consumption debates can favor both sides. What does need to be addressed is the networks efficiency should it vie to become commercial grade.

Fidelity Eyes Large CapLast week saw the head of Fidelity Digital Assets Tom Jessop reveal that the company has on-boarded 13,000 institutional investors to partake in their cryptocurrency offerings, Bitcoin and Ether. The company's digital asset arm that launched only last month is now said to also be considering adding more cryptocurrencies that sit at the top 5 of the market capitalization table. This has now become a recurring theme across major exchanges, and institutional investment options that range from Grayscale's Digital Large Cap Fund, to the latest Exchange Traded Product launched on the SIX Exchange in Switzerland, the Amun ETP Index.

SEC Expands OversightWhile the US Securities and Exchange commission was slower than expected to start taking legal action against Initial Coin Offerings (ICO), the regulator has been winning notches in quick succession as of late. Following settled orders against Decentralized Exchange EtherDelta, two ICOs, Paragon and AirFox, the watchdog has now added promoters to its list with last week having announced charges brought against boxing champ Flyod Mayweather and musician DJ Khaled for not disclosing earnings for promoting ICOs. As of mid-year, the SEC had at least 12 filed lawsuits revolving around cryptocurrencies, bitcoin and blockchain activities.